Vp Plc warned on Wednesday that a challenging macroeconomic backdrop had prompted a reset of expectations, as the specialist equipment rental group reported slower trading in the final quarter and cut its full-year profit outlook.
In a trading update for the 10 months ended 31 January, the London-listed company said market headwinds in construction and water, including a slower-than-expected impact from AMP8, had led to a disappointingly muted January 'return to work' and a correspondingly slow fourth-quarter ramp-up in activity volumes.
As a result, Vp said it now expected to report profit before tax, amortisation and impairment of goodwill, trade names and customer relationships and exceptional items in the range of £26m to £29m for the current financial year.
Across its end markets, Vp said it continued to see growth and strong demand in energy transmission, while rail activity remained steady but subdued.
The group remained positive on prospects in water and confident in its ability to benefit from the significant increase in expenditure under AMP8, but while there had been an uptick in design and planning work, it now expected meaningful increases in water revenues to fall into the 2027 financial year rather than the current period.
General construction remains subdued, with knock-on effects for activity levels across several of the group's businesses.
In smaller end markets, performance in housebuilding had benefited from operating model changes introduced last year, though overall activity remains subdued.
Energy markets continued to be impacted by macroeconomic factors, with increased project activity now anticipated in 2027.
Vp said it was continuing to execute its strategy, including the implementation of its digital roadmap and further harmonisation of systems and business processes.
At Brandon Hire Station, which operates in general construction, the group said good progress has been made on the transformation programme announced in November.
The branch footprint was being reduced from more than 100 locations to 41 and headcount was being cut by around 400, with the transformation materially on track for completion by 31 March.
Vp's board said the group's robust balance sheet, transformation of Brandon and focussed strategy targeting core sectors left it well positioned to capitalise on future market opportunities.
"Vp remains committed to its strategy of offering a diversified range of specialist equipment and expertise to clients across a portfolio of critical market sectors," said chief executive Alice Woodwark.
"While this diversity and breadth gives our business market-leading resilience and opportunity, it is not immune to general trading conditions in construction and delays to major infrastructure programme spend in key sectors.
"Our progress in transforming Brandon, which is on track for completion within the financial year, and our commitment to a strategy of growth and operational excellence position us well to take advantage of future opportunities across our markets."
At 0948 GMT, shares in Vp were down 12.44% at 485.07p.
Reporting by Josh White for Sharecast.com.